October 5, 2017

Of the approximately 742,000 owner-occupied houses in Mississippi in 2014, 379,000 or 51% had a mortgage.

In 2014, 189,200 taxpayers in Mississippi claimed a deduction for mortgage interest (MID). The total amount deducted was $1,225,457,000. This means that the average taxpayer claiming the MID subtracted $6,500 from taxable income in 2014 as a result of the MID.

At a marginal rate of 25 percent1, this means that the average taxpayer saved $1,620 in taxes as a result of the MID. The total tax savings from the MID in Mississippi in 2014 was $306,364,250.

In 2014, 219,300 taxpayers in Mississippi claimed a deduction for real estate taxes. The total amount deducted was $437,877,000. This means that the average taxpayer claiming the real estate tax deduction subtracted $2,000 from taxable income in 2014.

At a marginal rate of 25 percent2, this means that the average taxpayer saved $ 500 in taxes as a result of the real estate tax deduction. The total savings from the real estate tax deduction in Mississippi in 2014 was $109,469,250.

If the MID and real estate tax deductions were eliminated, the loss would not be a one-year event; homeowners lose out on these potential savings each and every year. The present value of these lost savings could total $10,662,397,400.

The value of all owner-occupied real estate in Mississippi in 2014 was $98,733,446,600. If the lost tax savings are fully capitalized into the price of houses, the average decline in value in Mississippi could be 11%. From the individual perspective, the median priced home in Mississippi in 2014 was $153,400. A decline in value as projected could mean a loss in home value of $16,550 for the typical home owner.

1 Marginal rates range from 10 to 35 percent.
2 Ibid.
3 Present value calculation assumes 3.9 percent discount rate and 1000 year time horizon.

Sources for the data above include: Internal Revenue Service 2014, American Community Survey 2014, National Association of Realtors® 2014; All calculations are by the National Association of Realtors® Research Division, July 2017.

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